Retainage
A portion of the contract amount withheld from payment until the work is deemed satisfactorily complete.
Retainage is a percentage of the payment withheld from contractors until project completion to ensure performance and quality. It provides leverage for project owners to ensure that all contractual obligations are met before final payment is made. The withheld amount is specified in an agreement between the contracting party (the party paying for the work) and a contracted party (the person or company performing the work). A common practice is to withhold 5-10% of a contract's total value until a milestone is reached. Then, the withheld amount can be released as a progress payment. When work is substantially complete, the withheld amount can be released as a final payment.
Used in a sentence
A portion of the contract amount is held as retainage until all work is satisfactorily completed.
Synonyms/variation
Retention
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